Shares in China’s Evergrande plunge as deal collapses

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Shares of China Evergrande Group, the world’s second-largest economy’s most indebted property developer, have plunged as much as 14 percent when they resumed trading on the Hong Kong Stock Exchange following a two-week suspension.

Thursday’s opening bell sell-off came after Evergrande announced that a deal to sell a $2.6bn stake in its property services unit had fallen through.

Evergrande recovered some of its earlier losses but was still down 9.8 percent in later trade. Its property services unit dropped 5 percent, while its electric vehicle arm plunged as much as 10.3 percent. Hopson rose 5.6 percent.

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Shenzhen-based Evergrande was once China’s top-selling developer but as it struggles with more than $300bn of debt, investors have become concerned. In recent days, government officials to come out in force to say the firm’s problems will not spin out of control and trigger a broader financial crisis.

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Evergrande said on Wednesday it had scrapped a deal to sell a 50.1 percent stake in Evergrande Property Services Group to Hopson Development Holdings, a Hong Kong firm, because the smaller rival had not met the “prerequisite to make a general offer”.

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